Where Are NZ Mortgage Rates Headed in 2025? Latest RBNZ Forecast Explained

RBNZ Lowers OCR to 3.75%

On 19 February 2025, the Reserve Bank of New Zealand (RBNZ) made a major move by cutting the Official Cash Rate (OCR) to 3.75%, down from 5.5%. This is the first rate cut in over three years and marks a shift toward easing monetary conditions. With inflation cooling and the economy stabilizing, this decision aims to support household budgets and property affordability.

How Are Banks Responding?

Following the OCR cut, mortgage rates have started to adjust—though not evenly across all banks. Here’s a quick snapshot of current 1-year fixed mortgage rates (as of March 2025) from major lenders in New Zealand:

ANZ Standard: 5.89% p.a. | Special (LVR <80%, 18 months): 5.19% p.a.
ASB Standard: 5.25% p.a. | Special (18 months): 5.19%
Kiwibank Standard: 6.09% p.a. | Special (1 Year): 5.19%
Westpac Standard: 5.89% p.a. | Special (LVR <80%, 18 months): 5.19%
BNZ Standard: 5.29% p.a.
TSB Bank Standard: Special: 5.39% p.a. | Special (LVR <80%, 18 months): 5.49%
Co-operative Bank Owner-Occupied (1 Year): 5.19% p.a.
ICBC Special (1 Year): 5.05% p.a.

While some lenders like Kiwibank and ASB offer special rates around 5.19% for borrowers with over 20% equity, standard rates remain closer to 5.89%–6.09% for 1-year fixed terms.

Trend: Gradual Decline in Fixed Rates

Most banks have started easing fixed rates slightly, particularly for short terms (6 months to 2 years). Floating rates, however, are still high—typically around 6.89% to 6.99%—and have not dropped as fast.

Why Buyer Confidence Is Rising

According to a recent Trade Me survey, 61% of Kiwis believe now is a good time to buy property—the highest level in two years. The combination of lower interest rates, more listings, and stabilized prices is making home ownership feel more achievable again.

What This Means for You

First-home buyers: Now may be a smart time to enter the market, especially with special rates under 5.30% available.
Refinancers: If you're on a higher fixed rate from 2023–24, check if it's time to refix at a better rate.
Investors: Consider locking in short-term fixed rates, as further OCR cuts could lead to more competitive offerings later in 2025.

Looking Ahead

Economists suggest we may see the OCR drop further to around 3.25% by late 2025. If inflation stays on track, mortgage rates may continue trending downward—though the process will likely be gradual.

FAQ: NZ Mortgage Rates

What is the current OCR? 3.75% (as of 19 Feb 2025)
Best 1-year special rate? Around 5.19% from ASB, Kiwibank, and Westpac
Will rates drop more? Likely yes, but slowly. Short-term fixed rates may see further cuts in mid–late 2025.

Staying informed on rates and timing your mortgage decisions can make a big difference in affordability. Always compare, ask questions, and seek advice before locking in.

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📌 About the Author

Kiwi Money Matters is written and maintained by a New Zealand-based writer with hands-on experience in finance and accounting since 2015.

All posts are personally researched, written to ensure clarity and trustworthiness for everyday Kiwis.

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